U.S. equity markets finished slightly higher today with the main indexes posting gains of between .5% and .8%. This comes after comments from Ben Bernanke who vowed that the U.S. central bank will wind down its stimulus measures when the time is right. Many investors interpreted this to mean that the Fed will be raising rates sooner rather than later. These comments, along with a recent $71 billion debt auction by the Treasury that the markets struggled to swallow, left bond yields sharply higher today, sending the benchmark 10-year note up 4%.
Due to the increase in Treasury yields, ProShares UltraShort Lehman 20+ Year Treasury (TBT) and other short bond funds rose sharply as bond prices fell to reflect the increase. TBT finished the trading day up nearly 4.5% while iShares Barclays Capital U.S. 20+ Year Treasury Bond Index fund (TLT) was down more than 2.25%. Meanwhile, in equities, Merrill Lynch’s Semiconductor HOLDR (SMH) was up over 3% while other semiconductor funds posted similar gains as Texas Instruments introduced a new intermediate frequency transcevier which helped push the entire industry higher, although it appears as if Texas Instruments is giving up most of its gains in after hours trading.
Meanwhile, on the commodity front, metals and softs found themselves sharply lower with iPath Dow Jones-AIG Sugar Total Return ETN (SGG) leading the way falling more than five percent after reports of more sugar being harvested and supply issues easing. Other commodities falling sharply were natural gas (UNG) which fell by almost 3.5% and base metals in general which trended modestly lower.